Window Phone 7's market slice contracted slightly in the closing months of last year. But the platforms true test will come when it reaches a fully-updated form, begins popping up in Nokia handsets, and hits Verizon/Sprint during Summer 2011. (Source: Reuters)

Windows Phone may yet reverse the fortunes of the struggling giant, but the proof isn't there yet

Q4 2011
wasn't exactly the start for Windows Phone 7 that Microsoft might have dreamed
of, but the platform is far from out of the picture.

Windows Phone 7 lost some ground in October 2010 through January 2011 of this
year according to market research firm comScore.
The platform dipped from 9.7 percent market share to 8.0 percent.

Other losers for the quarter were HP's Palm unit, which fell from 3.9 to 3.2
percent, and RIM, which dropped from 35.8 to 30.4 percent. Apple held
steady, beginning at 24.6 and closing at 24.7 percent.

The only real winner was Android that soared from 23.5 percent to 31.2 percent.
In other words -- Android is eating everyone else's lunch, except for
Apple that is hanging steady due to its legion of loyal fans.

Ultimately this is news we've known for some time now. Other market
research reports have reported Android already having passed RIM and iOS.
The interesting and much-talked-about aspect of this particular report is
the implication that Microsoft lost even more market share.

While it's tempting to predict to buy in to the gloom and predict the demise of
Windows Phone 7 (and some are indeed doing exactly that), the outlook for
Windows Phone 7 is pretty good. With arguably the market's most
cutting-edge user interface (and a well-liked one by customers to boot) Windows
Phone 7 offers a unique profile.

With a partnership with Nokia in hand it seems
destined for a large boost in market share, possibly to the number two
position, as Nokia phases out Symbian over the next year. Many have
expressed skepticism of this given Nokia's poor performance, but history shows
that Nokia is more than capable of lingering around, market share-wise, despite
an anemic smartphone lineup in the U.S. And while recently revealed
details indicate Microsoft may have essentially "bought" that market share
via a $1B USD payout to Nokia, at the end of the day
it's where the market moves that counts.

The reasons for the dip seem pretty straightforward.

First, there was a limited number of handset options at launch time compared to
Android and WP7 handsets haven't landed on Verizon or Sprint. In this
regard Microsoft will continue to suffer for a little while as a Microsoft spokesperson
says that the handsets won't hit America's biggest and third biggest
(respectively) carriers until June 30.

Second, many buyers on AT&T and T-Mobile who might be interested in Windows
Phone 7 handsets may be waiting to see how Microsoft's intense cycle of early updates plays out.
Those updates will add functionality like third-party multi-tasking and
copy and paste. Likewise they're likely waiting for issues like update compatibility and phantom data to be cleaned up as Microsoft
and its hardware partners break in the platform.

Reality is that Windows Phone 7's true potential won't be seen until it lands
on Verizon -- effectively in July -- at the least. Like Android's
original launch, the most serious test will come at about the end of the year.
If the platform can't gain ground during the Nokia phase-in and with a
year of updates under its belt, then it's time to worry. But chances are
that Microsoft's position will improve -- even if its start was far from what
it might have hoped for in its most optimistic dreams.

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I love the interface for WP7. It's the smoothest, cleanest and most polished around. Makes iOS look dated. And one of the biggest problems with Android is that until recently (2.3) it's lacked GPU acceleration for the UI, so it's always lagged when scrolling and such even on the best hardware. Makes it seem slower even if the hardware is the fastest around. It's one of the first things people say when i show them Android "it's laggy" and then they instantly dismiss it and go back to there iPhone.I'm just waiting for more features in WP7 before i get it - like many others.

And i dont see it saying anywhere that Windows Phone 7 marketshare has dropped at all. On the comScore site it just says Microsofts share on a whole has dropped, not WP7. So it most likely would have dropped from all the people that are still leaving Windows Mobile 6.x.